WebProNews

The search engine company has plans to establish an online payment service similar to PayPal.

Tantalizing hints of a Google-based competitor to eBay's PayPal service have begun to circulate the Internet. On April 13, Google filed documents with the state of California to form the Google Payment Corp, according to the Wall Street Journal.

No official comment has been received from Google yet. It is expected that a Google payment system would be similar to PayPal's, and that Google would take a fee on each payment made through its service.

That would allow Google to diversify beyond its online advertising model, in terms of revenue. Google's various ad services generated 99 percent of its 2004 $3.2 billion USD revenue.

PayPal, which began as a way for individuals to exchange money and to pay for online transactions, has morphed into a payment processor for eBay, which heavily promotes PayPal as the payment option for its online auctions.

Ebay earned $233.1 million from PayPal in the first quarter. To further increase their returns, eBay has been trying to market PayPal as a payment service to other web sites. PayPal and eBay have not yet commented on the potential Google service.

PayPal fans like one aspect of the service, where they can pay for an eBay auction or a product or service on a Web site without having to provide what may be an unknown seller with credit card details. Those are held by PayPal.

A payment service would be a useful addition to Google's existing Froogle service. Froogle, which searches through catalogs, could offer catalog retailers the opportunity to have searchers make a purchase from them through Froogle's pages.

The customer could click on a "buy this" icon, have the Google payment service process the transaction, and submit the order directly to the seller. Froogle currently redirects visitors who click on a product listing to the seller's Web site.

David Utter is a staff writer for WebProNews covering technology and business. Email him here.